Should Your Startup File for a Patent?

Patents are a form of intellectual property that grants the patent holder the legal right to prevent others from using, producing, or selling an idea or invention for the life of the patent in exchange for the publication of the details of the idea or invention in the public domain.

Patents are designed to protect the work and intellectual property of the patent holder for the life of the patent. Depending on the type of patent, they are granted for up to 14 to 20 years; however, some types of patents must also be renewed and maintained during this period in order to continue in effect. 

What Can You Patent?

There are many things that can be patented, but in general, patentable intellectual property must be new, useful, and capable of practical application. Here are some examples of the types of things that can be patented:

There are also several things that may seem to be new and unique inventions or discoveries but cannot be patented. This list of exclusions includes:

In the United States, patents are governed by the United States Patent and Trade Office (USPTO). The USPTO grants three separate categories of patents- the utility patent, design patent, and plant patent. 

The type of patent you apply for depends on the type of intellectual property that you have created, and each has a different application and maintenance process.

• Utility patent: Utility patents are patents granted for new and useful processes, machines, articles of manufacture, or compositions of matters, or any new useful improvement of any of these. Utility patents protect how something works.
• Design patent: Design patents are patents granted for new, original, and ornamental designs for articles of manufacture. Design patents protect something’s visual aesthetic — how something looks.
• Plant patent: Plant patents are patents granted for distinct and new varieties of asexually reproducible plants.

The provisional patent isn’t really a patent in the sense that it provides any sort of protection. Rather, a provisional patent is a temporary “patent” in which you declare your invention and intention to file a patent within one year, and the USPTO grants a provisional patent as a placeholder until you file a formal patent application.

The ideas and inventions in provisional patent applications are not reviewed by the USPTO. Provisional patents only act as an early record or placeholder of your claim to an invention. In order to obtain an actual patent, you will need to file a patent application within one year of receiving a provisional patent.

A poor man’s patent is when you write down the full details of your invention in a letter and mail the letter to yourself. In theory, the postmark on the envelope is supposed to act as a placeholder for when the invention was thought of or created.

While you can see the intention in attempting to document a discovery or invention, this theory has rarely succeeded in court and is unlikely to in the future — at least in the US. In 2013, Congress passed the America Invents Act, which officially changed the patent laws to prioritize the first-to-file rather than the first-to-invent. 

Like anything, there are numerous advantages and disadvantages of applying for and maintaining patents. In order to decide whether your startup should apply for a patent, you will need to understand the pros and cons.

Patent Pros

Patents can be useful tools for startups that want to protect their intellectual property. Applying for and being granted a patent provides security that others won’t imitate and profit off of your invention. Here are some of the advantages of applying for and being granted a patent: 

Patents Help Protect Your Intellectual Property

When you patent an invention, design or plant, you are considered the legal owner of the intellectual property. If you are granted a patent, no one else is permitted to use your idea or invention without your permission. When your IP is patent protected, competitors are not permitted to replicate your process, use your coding, or manufacture your invention.

Patent protection lasts for up to 20 years, depending on the type of patent that is issued. Utility patents, the most common, and plant patents come with the longest life — 20 years. Design patents are issued for a shorter amount of time, with a life of 14 years. 

Patents Allow You to License Your Idea or Invention to Others

In addition to “owning” your intellectual property, a patent also provides you the ability to license your idea or invention to others or even sell the rights to the patent. Depending on the nature of your startup, licensing or selling the rights to a patent (or patents) can provide important infusions of cash or ongoing revenue streams. Thus, patents or patent portfolios can make your startup extra attractive to investors.

Patents Help Attract Investors and Funding

Patents can be valuable for startups, both in terms of the value of the startup as well as how attractive it is to investors. For one, patents reduce risk by giving you exclusive rights to your invention. But not only that, as the owner of a patent, you can also license or sell those rights, making a patent a value-adding asset of the startup — further making your startup more attractive to and valuable to investors and venture capital. 

Patents Increase Legitimacy

In addition to the above, patents also grant a certain amount of legitimacy. When a startup is granted a patent, it is made to seem more credible. Not only have you created something that has been vetted as new and unique, but your startup also now controls a potentially valuable asset for the next 14 to 20 years.

Patent Cons

Although patents come with many advantages, there are also drawbacks to applying for and maintaining a patent. 

The Patent Process Is Complex

One of the major disadvantages of applying for a patent is the complexity. In your patent application, you need to show why your idea or invention is new and unique. This is not as easy as it sounds and will require research and likely a back and forth with patent examiners in order to make your case. Navigating the patent process can sometimes take years, requiring several stages of review. In that time, the technology may become obsolete, or the market may change.

Applying for a Patent Is Expensive 

A second major disadvantage of applying for a patent is the cost. Patents require a significant upfront investment. The majority of the costs are usually associated with hiring a patent attorney. A good intellectual property lawyer may charge fees ranging anywhere from $500 to $1,000 an hour or more. 

There are also costs for the filing and review of your patent application with the USPTO. Filing fees range from $55 to $220 for design and plant patents and from $80 to $320 for utility patents depending on the size of your startup. There are also many additional fees, such as a fee for a provisional patent, a fee to submit the application for review, and a fee when the patent is issued. 

In addition, after you receive your patent, there are also maintenance fees in order to maintain your patent and not lose your IP rights. You will need to account for all of these costs when deciding on whether filing for a patent is right for your startup.

You Must Disclose All Aspects of Your Invention

Another big drawback of patents is that you must disclose all aspects of your idea or invention in your patent application, and if you are granted a patent, it is published in the public domain. 

Your patent application must include everything about your idea, such as details about how it works and illustrations or images, for the public (and your competitors) to view. This aspect has kept many inventors who wanted to keep their secrets safe from filing a patent, as when the patent expires, anyone would be free to use their intellectual property. 

Maintaining and Protecting Your Patent Is Ongoing and Difficult

Once you are granted a patent, your startup is also responsible for monitoring and enforcing it. If someone else infringes on your idea, it is up to you to follow the legal steps necessary to stop them. In many cases a letter, or letter from your attorney, informing them that they are infringing on your patent and demanding them to stop will do. 

However, there are many cases where what is patented is under disagreement. The patent process will narrow your utility patent to what is truly new and unique. Often, this results in a patent that protects only a specific aspect of a product, service, or process. If what is protected is at disagreement, the patent holder is solely responsible for bringing a patent lawsuit to court to argue their case and be afforded protections.

Patents Only Apply in One Jurisdiction

Another downfall of patents is that they only apply in one jurisdiction. This means that you only have rights to your patented idea or invention and protection in the country or countries in which you filed and were granted a patent.

If you intend to sell your idea or invention and compete in other countries, you will need to patent your idea in those jurisdictions as well.

When deciding if your startup should apply for a patent, you will need to assess your idea or invention and weigh the risks of not applying for a patent against the potential costs of doing so.

Here are some of the things you should consider:

• Is your idea or invention patentable?
• Can your invention be safeguarded as a trade secret?
• Will disclosing your ideas lead potential competitors to find workarounds?
• Will disclosing your ideas lead potential competitors to beat you to the market in other countries?
• Are you planning on taking on investors?
• Can you justify the costs?

If your startup decides it is going to file a patent, you need to think about when to file for your patent. Your decision should factor in the first to file patent priority and the limited life of patent protection. 

If you wait to file a patent, you risk someone else filing for patent protection for a similar idea or invention first. Because the first to file for a patent application has priority in receiving a patent, you may be left with something less “new” and “unique” and end up without a patent. 

On the other hand, if you file for patent protection before you have developed a product or technology, you risk wasting valuable time under patent protection while still developing your technology.

Consider getting a patent if:

• Your idea or invention can be patented
• You believe you will receive patent protection for a meaningful aspect of your idea or invention
• You are worried someone else may patent a similar idea
• You don’t believe you can safeguard your idea as a trade secret
• Disclosing your ideas is not likely to lead potential competitors to find workarounds
• Disclosing your ideas is not likely to lead potential competitors to beat you to market in other countries
• You are planning on taking on investors, or you need to increase the valuation of the company
• You can justify the costs of applying for and maintaining a patent (sometimes $10,000+)

Consider NOT getting a patent if:

• You don’t believe you will receive patent protection, or you will not receive protection for any meaningful aspects of your idea or invention
• You believe you can safeguard your idea as a trade secret
• Disclosing your ideas is likely to lead potential competitors to find workarounds
• Disclosing your ideas is likely to lead potential competitors to beat you to market in other countries
• You are not planning on taking on investors or you do not need an immediate increase in the valuation of the company
• You cannot justify the costs of applying for and maintaining a patent

Consider waiting to get a patent if:

• You believe you can safeguard your idea as a trade secret.
• Disclosing your ideas is not likely to lead potential competitors to find workarounds.
• Disclosing your ideas is not likely to lead potential competitors to beat you to market in other countries.
• You are not planning on taking on investors in the immediate future.
• You cannot yet justify the costs.